Wednesday, June 29, 2011

Hainan's Banana Glut

Not everything is getting more expensive in China. The bottom has fallen out of the banana market. At their peak in Februrary, bananas in Hainan Province sold for 7.6 yuan per kg. Since the beginning of June, bananas have been in severe oversupply in Hainan and the price is now 0.25 to 0.60 yuan per kg.

Another farmer said he contracted 1000 mu (about 165 acres) to grow bananas, of which 220 mu are ready for harvest. He rents the land for 450 yuan per mu [about $420 per acre, double what grain land rents for in much of inland China, but about average for fruit and vegetable land] and his total costs are 6700 yuan. He has to sell at 1 yuan per kg to cover his costs, so at current prices he will lose 0.7 yuan on every kilogram he sells. He's thinking about shipping his bananas to the Yingkou port [in Liaoning Province?] which would take about a month. He hopes the price might recover by then.

The reporter found that banana prices were way down in all the major banana-production areas of Hainan. One factor behind the plunging prices is cold weather that delayed the winter banana harvest about 20 days so that their harvest overlapped with the spring banana crop. Second, the summer is a low season for bananas since there are a lot of other kinds of fruit available, plus bananas from Guangxi and Guangdong and southeast Asia are available. Another issue is that media reports about ethylene-ripening of bananas scared consumers, although the chairman of the Hainan banana association says it's a natural process that does not threaten consumers' health.

One banana dealer named Huang said he filled 5 or 6 trucks with bananas, paying .2 to .6 yuan. He said, “We haven’t made any money on what we purchased; since mid-April this price has been dropping, and we lose money every day we buy."

A researcher from the Chinese Academy of Agricultural Sciences says they are working with the banana association to coordinate sales with processing companies in northern China.

At Haikou supermarkets the reporter saw bananas on sale for 2.18 yuan compared with the local purchase price of .4 to .6 yuan. A supermarket manager said the price will go down to reflect the market trend.

At a fruit stand in Hangzhou a sign offers a special price of 1.8 yuan per jin (3.6 yuan/kg), but the cashier says it's common for bananas to sell for 2 yuan at this time of year, sometimes as low as 1.5 yuan.

Fruit shops in Linyi of Shandong Province were selling Hainan bananas for about 2 yuan per jin (4 yuan/kg). The wholesale price is 25 yuan for a box of 12 kg (about 2 yuan/kg). The shopkeeper says the price of bananas in Hainan is about 0.7 yuan and it costs 1.8 to 2.0 yuan to transport them to Linyi. Bananas are highly perishable, only keeping about 3 days in the summer.